From Wikipedia, the free encyclopedia

Socialized medicine or state medicine is a health care system that is controlled by the government and financed by taxpayers^[1]. Although "strictly speaking, the term 'socialized medicine should be reserved for health systems in which the government operates the production of health care and provides its financing"^[2], it can refer to any system of medical care that is largely both publicly financed and government administered or regulated.^{[3] [4]}

In practice, the population through its elected government insures itself against the incursion of health care costs at time of need through taxation or a compulsory health insurance system. There are two main systems of provision.

In one type of provision, the government manages the supply side by employing health care workers directly and owns the majority of health care facilities ^[5]. Examples of this include such systems as the United States' Veterans Health Administration, the British National Health Service hospital trusts.^[6][7] and the Cuban national health care system ^[8][9]

In the other type of provision, the government contracts with private medical practices to provide the service under rules and regulations for payment. Examples include Canada's, Australia's and the USA's Medicare systems, and Britain's NHS general practitioner service ^[10].

Most industrialized countries, and many developing countries, operate some form of socialized medicine, though the term is often used pejoratively in United States political discourse. ^{[11] [12]}

Contents 1 Usage of the term and classification 1.1 Usage of the term in the United States 2 History 3 Present day implementations of socialized medicine 3.1 United Kingdom 3.2 Canada 3.3 Israel 3.4 Finland 3.5 USA 4 Benefits of socialized medicine 5 Criticisms of socialized medicine 6 See also 6.1 Other types of health care systems 6.2 Related topics 7 Notes and references 8 External links 8.1 Criticisms

Usage of the term socialized medicine is inconsistent, particularly in political discourse where it is often used in a derogatory sense (by extension to socialism). Public policy professionals and economists tend to use a more restrictive sense of the term, where government is responsible for substantially all financing and provision. One system classifies methods of financing (government financed, private insurance within a statutory framework such as compulsory health insurance, private insurance within an unregulated market, or direct payment by patients at the point of service) and the methods of provision (government owned, private not-for-profit, and private for-profit).^[13] Under the more strict definition, the U.K. may qualify as a socialized health care system; under a broader definition, most of Western Europe and Canada may be referred to as having socialized medicine (although the term is generally not frequently used in those countries).

The term began as a pejorative phrase first popularized in 1920s and 1930s United States politics by conservative opponents of publicly operated health care with a hostility to programs similar in nature to socialism and communism. Publicly operated health care was first proposed during the administration of U.S. President Franklin Roosevelt and later championed by many others, but ardently opposed by the American Medical Association (including distribution of posters to doctors with slogans such as "Socialized medicine ... will undermine the democratic form of government."^[14])

American hostility to socialism remains a common basis of objection to universal health care by those generally opposed to expansion of government, social services and other redistributory policies.^{[15] [16]} For example, in a July 2007 campaign speech, Republican presidential candidate Rudolph Giuliani made a direct connection between socialized medicine and socialism, saying "the American way is not single-payer, government-controlled anything. That's a European way of doing something; that's frankly a socialist way of doing something. That's why when you hear Democrats in particular talk about single-mandated health care, universal health care, what they're talking about is socialized medicine."^[17] Giuliani also quoted statistics to support his claim that he had a better chance of surviving prostate cancer in the U.S. than he would have had in the United Kingdom.

Princeton University economist Paul Krugman said that Giuliani's statistics were "just wrong" and "scare tactics," and accused Giuliani of "simply lying" by calling the Democratic health care proposals "socialized medicine."^[18]

The term is widely used by the American media and pressure groups. However, medical staff, most professionals in the field and international bodies such as the WHO tend to avoid its use. Outside the U.S., the terms most commonly used are universal health care or public health care.

The first system of socialized medicine based on compulsory insurance with state subsidy was created by Otto von Bismarck after the Franco-Prussian War of 1870.^[19] Socialized health care was implemented by the Soviet Union in the 1920s.^[20]. New Zealand was the first country with a mixed economy to provide the direct provision of health care by the state when, in 1939, it provided mental health services free of cost to the recipient following the passing of the Social Security Act of 1938^[21]. After World War II in the 1940s Britain established its National Health Service which was built from the outset as a comprehensive service. A socialized model was used in China in from the 1950s to the 1970s during the first two decades of communist rule. ^[22] Cuba adopted socialized medicine in the 1960s under the leadership of Fidel Castro. ^[23] Also in the 1960s, the United States initiated its Medicaid program to help poor mothers and their children. ^[24]

At the meeting of the World Health Organization in Alma Ata, Kazakhstan in 1978, a global covenant was signed proclaiming that the provision of medical services must be the responsibility of national governments.^{[citation needed]}

Main article: National Health Service

The National Health Service or NHS as it is more commonly known, was set up on July 5 1948 to "provide healthcare for all citizens, based on need, not the ability to pay." It is funded by the taxpayer and managed by a government department, the Department of Health, which sets overall policy on health issues. ^[25] There are four separate health services for each of the three constituent nations (England, Scotland, and Wales) and one for Northern Ireland. In practice, they work closely together and provide a seamless service based on the same core principles.

"The NHS is committed to providing quality care that meets the needs of everyone, is free at the point of need, and is based on a patient's clinical need, not their ability to pay." (Source: NHS website) ^[26]

The core of the service are the General Practioners (GPs or family doctors) who are responsible for the care of patients registered with them. GPs are private doctors that choose to contract with the NHS to provide services to patients paid for by the government and not the patient. They are paid a capitation fee and certain other payments according to work they do and their performance. Patients are free to register with any GP of their choice in their locality. GPs can prescribe medicines for collection at a local pharmacy. Patients of working age pay a fixed price (about US$13) for each drug prescribed regardless of the amount of drug prescribed or the cost to the pharmacy. The pharmacy invoices the cost of the drugs (less the fixed price patient contributution) to the NHS. GPs can refer their patients to a hospital for more specialized services and for surgery. GP referrals are needed to see any hospital specialist. Most patients choose to be treated in NHS run hospitals because the cost of services obtained there (medicines, surgeons and other care workers, and even meals) are free of charge to the patient. Ambulance services, mental health, and anciliary services such as physical and occupational therapy, in-home and in-clinic nursing, and certain care for the sick elderly in nursing homes are met from the NHS budget. The cost to the taxpayer in 2007 is £104 billion or about £152 per person per month.

There is popular support for socialized medicine in the UK. In opinion polls carried out regularly, IPSOS-MORI asks people which of the following two statements best reflects their thinking about the NHS. "The NHS is crucial to British society and we must do everything to maintain it" (chosen by 78%) and "The NHS was a great project but we cannot maintain it in its current form" (chosen by 20%) ^[27]. None of the main political parties or even the fringe parties propose adopting a different health care system. The UK's centre-right Conservative party says its policies are aimed at "Protecting and improving our health service by putting patients back at the heart of the NHS, and trusting the professionals to ensure that they are able to use their skills to make the fullest possible contribution to patient care."^[28]. Even the ultra-right-wing British National Party says that "socialised medicine is not just a hallmark of a decent society, but economically rational as well. If one leaves behind capitalist-romantic theories about private-sector efficiency and looks at real-world privatised medicine, which may be observed in America, it is an obvious disaster. It is vastly more expensive and delivers mediocre results outside of luxury care. Britain spends about ⅓ the money per person and has public health statistics roughly equivalent to America, except for the fact that the bottom ¼ of Britain's population is vastly healthier." ^[29]

A member of Margaret Thatcher's government, Nigel Lawson, described the NHS in his memoirs as "the closest thing the English have to a religion." ^[30]The Thatcher administration made only minor changes to the system, and although many state industries were privatized, the state health sector was not one of them. ^[31]

The Health Care Commission undertakes regular surveys of patients' opinions of the NHS. In its most recent survey (2006), experience of hospitals in England was rated by those who responded to the surveys as follows: “excellent” (41%), “very good (36%)”, “good”(15%), “fair” (6%) and “poor” (2%). ^[32]

The NHS is the world's largest socialized health care system. ^[33]

Main article: Medicare (Canada)

The provision of health care in Canada is done mostly via private practitioners and hospitals although there are also some public hospitals and clinics. Patients may go to any doctor or hospital in the country. ^[34]

Detractors of the Canadian health care system do sometimes refer to it as socialized medicine because it is regulated by the government. ^[35] Supporters would describe it as single-payer health care because health care is provided privately but is paid from a single source, a publicly funded insurance program where costs are controlled.

Israel has maintained a system of socialized health care since its establishment in 1948, although the National Health Insurance law was passed only on January 1, 1995. The state is responsible for providing health services to all residents of the country, who must register with one of the four sick funds, known as Kupat Holim. Coverage includes medical diagnosis and treatment, preventive medicine, hospitalization (general, maternity, psychiatric and chronic), surgery and transplants, preventive dental care for children, first aid and transportation to a hospital or clinic, medical services at the workplace, treatment for drug abuse and alcoholism, medical equipment and appliances, obstetrics and fertility treatment, medication, treatment of chronic diseases and paramedical services such as physiotherapy and occupational therapy.^[36]

Finland has a highly decentralized three level socialized system of health care and alongside these, a much smaller private health care system. Responsibility for heath care is devolved to the muncipalities (local government), Primary health care is obtained from district health centers employing general practitioners and nurses that provide most day-to-day medical services. The general practitioners are also gatekeepers to more the more specialized services in the secondary and tertiary care sectors. Secondary care is provided by the municipalities through district hospitals where more specialist care is available. Finland also has a network of five university teaching hospitals which makes up the tertiary level. These contain the most advanced medical facilities in the country and they are where Finnish doctors learn their profession. These are funded by the municipalities, but national government meets the cost of medical training. These hospitals are located in the major citites of Helsinki, Turku, Tampere, Kuopio, and Oulu.

There is a high level of co-operation between the various sectors which all have access to computerised patient data. Since the 1980s, the planning system for basic health care has been extended and now plans not just health care services but also care homes for the elderly and day care for children creating a fairly seamless cradle to grave system.

The separate private health care system is very small. Between 3 and 4 per cent of hospital in-patient care is provided by the private health care system and the remainder by the public or socialized system. Physiotherapy, dentistry and occupational health services are the main areas where the private sector is most used, although the municipalities by law also have to provide basic dental services. Employers are obliged by law to provide occupational health care services for their employees, as are educational establishments for their students as well as their staff. Only about 10 per cent of the income of private sector income comes from private insurance. Most is paid for out of pocket, but a significant share of the cost is reclaimable from the National Insurance system KELA. Spectacles, however, are not publicly subsidized.

A Patient’s Injury Law gives patients the right to compensation for unforeseeable injury that occurred as a result of treatment or diagnosis. Health care personnel need not be shown to be legally responsible for the injury thus avoiding the development of a litigious blame culture and the development of defensive medicical practices. To receive compensation, it is sufficient that unforeseeable injury as defined by law occurred. A law on patients’ status and rights, the first such law in Europe, ensures a patient’s right to information, to informed consent to treatment, the right to see any relevant medical documents,and the right to autonomy.

Finland's health care services are more highly socialized than the European average. The quality of service in Finnish health care is considered to be good and according to a survey published by the European Commission in 2000, Finland has the highest number of people satisfied with their health care system in the EU: more than 80% of Finnish respondents were satisfied compared with the EU average of 41.3%. Finnish health care expeditures are below the European average.

Overall, the muncipalities (funded by taxation, local and national) meet about two thirds of all medical care costs and the remaining one third by the national insurance system (nationally funded) and patients themselves by direct charges and fees for service. Direct fees to residents meet about 10 percent of the cost of social welfare and health medical care in Finland^[37]. There are caps on total medical expenses that are met out of pocket for drugs and hospital treatments. All necessary costs over these caps are paid for by the National Insurance system.

Main source: Finland report on Health Care Systems in Transition (WHO)

The Veterans Health Administration and the Indian Health Service are good examples of socialized medicine in the USA, although for limited populations.

The benefits claimed for socialized medicine include the following.

• The system is better geared to keep the nation healthy

When health care is paid for and provided by the government, it has every incentive to keep the nation healthy to reduce costs. When health care workers' income is directly dependent on keeping patients coming through the door, their employers lose income if their patients are healthy and stay away. Long term health promotion is less likely to occur because it either tends to either reduce earnings in the longer term (if the patient does not return to the clinic/hospital) and insurance companies tend not to fund this type of care because it would tend to save money for another insurer because the future event that could be prevented is likely to affect a different insurer by the time it happens ^[38].

• Centralized planning can maximize investment returns to reduce average costs when provider and payer are the same entity

For example, medical imaging technology, which has a high capital cost, is used most efficiently if there is a high throughput of patients ^[39]. The average cost of an exam will be lower at higher throughput rates as high fixed capital costs are recouped across a high number of patients. A centrally planned health care system can guarantee a high throughput rate at a Magnetic Imaging Resolution (MRI) unit because it has an almost perfect knowledge of demand and supply conditions it can acquire new units and/or retire old units to meet anticpated demand in order to ensure a high rate of use.

For example the UK's NHS has increased MRI throughput rates over the past 10 years and are now handling about 4000 exams per unit per year, an increase of about 26% since 2001 ^[40] This certainty is hard to achieve in other systems where there are multiple health care payers (insurance companies and individuals) making purchase choices which affect overall demand and multiple providers (hospitals and private imaging practices) making MRI investment decisions and controlling supply. For example, in the US, between the years 1985 and 2000 investors had installed MRI units at a much faster rate than the demand for scans such that average throughput rates actually fell, from 3,143 per year to an estimated 2,361 per year. Based on US data at 2001 prices, the average cost of a scan of unit running at 2,000 scans per year was 440 dollars per scan compared to 281 dollars per scan at a rate of 4,000 exams per year. ^[41].

• Countries where health care is provided mostly by government tend to spend less on health care overall than similar countries with a more mixed health care system.

This may be due to a number of factors such as bulk purchasing, centralization efficiencies (e.g. IT systems, payroll), lower spend on defensive medicine and fewer potentially expensive litigations for malpractice.^{[citation needed]}

• Socialized systems that provide universal health care give expression to a collectivist view that health care is a right for everyone.

• In most socialized systems, pre-existing conditions do not affect a person's access to medical services

• In most socialized systems, changing employer does not have health care consequences

People are free to change employer, move to a new location, without ever leaving the risk pool and in the knowledge that a pre-existing condition will not affect the ability to get treatment and will not affect their future medical expenses.

• In National Health Care schemes, coverage is usually well understood by the population as a whole because there is one scheme. The coverage rules are often mentioned in the press and are therefore become known to many people.

• Costs to the patient at the time of need are low or non-existent.

In most countries with a socialized health service, the state assumes the major costs of medical treatment and medicines at the time of need. Patients may be required to pay a capped contribution before the state begins to assumes the remaining costs of their treatment.^{[citation needed]}

Before examining the criticisms often made of socialized medicine, it is worth noting that the term is often used to criticize socialized health care outside the US, but rarely to describe socialized health care programs in the U.S. such as the Veterans Administration clinics and hospitals, the Army Medical Service ^[42] nor the single payer programs such as Medicaid and Medicare.

The criticisms leveled against socialized medicine are as follows:

• Higher Taxes:

A country which adopts a totally tax funded socialized form of health care will have to increase the average tax rate by an amount equivalent to the cost of providing health care and the overhead in administering the system. Offsetting this will be savings equivalent to the entire revenues of the health insurance industry, which will cease to exist all together, and all other direct medical fees paid to medical providers such as non-insured treatment, co-payments and deductibles, and prescription drug costs.

The degree to which the adoption of tax as a funding method for health care is re-distributive will depend on the method of tax raising. Some countries use a payroll tax in whole or in part to fund health care which may be levied on both employers and employees. Other countries (e.g. Switzerland) use a compulsory national insurance funding model with a flatter rate contribution system less related to income. Contributions for such programs can be considered as a form of taxation even if the funds do not pass through government hands.

• Waiting times: Critics often contend that socialized medicine is characterized by long waiting times for treatment.

For example, the National Health Service reports that the median admission wait time for elective inpatient treatment (non-urgent hospital treatment) in England at the end of August 2007, was just under 6 weeks, and 87.5 per cent of patients were admitted within 13 weeks. 0.04% of those waiting were waiting more than 26 weeks. The median wait time has reduced slowly over a 3 year period from about 10 weeks in 2004 to its present level of about 6 weeks. Similarly, the median wait time for a first GP referral to a specialist was just over 3 weeks. 92% of patients were seen within 13 weeks. ^[43]

Supporters of socialized medicine say there is also waiting in free market medicine because of normal scheduling or because the price mechanism can force some to wait. Those that cannot afford their treatment at the price level determined by the free market (or by a combination of the free market and state regulations that are common in most countries) because they cannot afford insurance premiums, are denied coverage by their insurer, or cannot afford to take out loans to cover their medical costs, or cannot obtain private charity, have to wait until they can afford their treatment. The numbers of people waiting in the free market is only known to hospitals and the insurance companies and is not recorded in governmental statistics. In socialized medicine, it is not the price mechanism but the relative need of the patient as determined by medical professionals (and/or civil servants^{[citation needed]} ) that determines waiting times. In a socialized system, the numbers waiting are recorded in governmental statistics which informs the public debate about how much national funding should be provided for health care. ^{[44] [45]}

Surveys on waiting times for certain elective procedures suggest that whereas such respondents are intolerant of long waits, exceeding three to six months, they can be quite sanguine about short and moderate waits, depending on the severity of the symptoms.^{[46] [47]}

Critics say the patient's "need" as defined by a doctor constitutes an arbitrary criterion for the distribution of health care^{[citation needed]}.

• Rationing: In any health system, there is a scarcity of resources that are available to provide everyone with the care they need, so health care resources must be rationed.

In socialized systems where health care is mostly free at the point of use and paid for by taxpayers, politicians and medical professionals ration the availability of health care. In such systems, the people, through the democratic process, determine how much of their money should be spent on health. Once the allocation of public funds has been made, it is up to the civil servants to determine how they will be allocated to each of the different sectors (such as health education, mental health, GP services, community medicine, surgical). Once each sector has a specific allocation, doctors are entitled to determine how those resources are used and prioritize patient access.

Both the allocation of overall funding to health and the allocation between areas and within an area to individual patients can become a topic of ending political debate. ^[48] Within the medical profession, professional bodies may established bodies (such as NICE in the UK) which examine the cost effectiveness of treatments and set 'rational' guidelines as to how allocations should be made.

If a person is "rationed out" of the national health care service in the socialized system that they paid for, they may have to seek alternative treatment in the private sector (where such an alternative is legal). If they cannot afford private care, they may have to go without.

In a purely free market, the price mechanism determines how health care is rationed. In countries that do not have a socialized health care system, government intervention is liable to distort the price mechanism and push it in up.

• Cancellations: Critics of socialized systems say that cancellations are a feature of the system.

As an incentive to reduce cancellations in UK NHS hospitals, regulations were introduced to force the NHS trust to perform a cancelled operation with the following 28 days or else give the patient the opportunity to have the surgery done at a private hospital of his own choice at the trust's own expense. As a result, the percentage of operations carried out on time has risen to almost 99%.^[49].

• Bureaucracy: Critics in the United States often claim that "socialized" or public medicine would introduce additional government control over the provision of health care and increase costs.

As it stands, the United States-- with a semi-socialized model-- spends more per capita on health than any other nation and more than twice as much as the country with the next highest level of spending, which has a different form of socialized health care. Administrative costs in the United States health care system are higher than in other countries and an important factor in United States spending, and administrative costs in the private sector are higher than in the public sector health care system ^[50]. One often-cited study by Harvard Medical School and the Canadian Institute for Health Information put the total administrative costs at 31 percent of U.S. health care spending.^[51] Supporters of the free market medicine would contend that these costs arise out of the substantial level of government regulation that exists in the United States's health care sector.^[52] According to a Cato Institute study, this regulation provides benefits in the amount of $170 billion but costs the public up to $340 billion.^[52]

• Choice: Critics sometimes argue that choice is restricted in socialized systems because individuals are not allowed a public sector alternative or are required to pay twice when one is available--once to subsidize the socialized system and a second time for their private care.

In some countries with socialized medicine, such as the UK, patients are offered a choice of general practitioner, all of whom are self-employed or work in private partnerships employing all practice nurses, doctors and clerical staff. In addition, some hospital services are sub-contracted to the private sector, so that patients can choose from a range of providers ^[53] International comparisons of quality of care and health outcomes generally rank the UK above the U.S.^[54][55]

The degree to which waiting in a socialized system affects choice varies from country to country. In the UK for example, a person is free at any time to seek treatment faster in the parallel free market medical system, but they will have to pay the full cost of their private treatment on top of their contribution to the national health care service. In Finland, it is possible to get some funding from the National Insurance System to get private sector care.^{[citation needed]} In Canada the right to jump the queue in this fashion is typically severely restricted by the government^{[citation needed]}.

• Capacity: Critics argue that central planning is inefficient and under investment leads to capacity shortages and that a lack of willingness to invest in expensive technology leads to shortages in areas such as MRI scanning. Some would argue that only the price mechanism in free market health care can allocate resources efficiently and that political pressure often leads to shortages in socialized systems.

Supporters of socialized medicine would contend that reports in the press and emanating from pressure groups are sometimes distorted and misleading.

• Government role in health: This claim is often made that doctors and not the government should determine what health care is provided to the individual and what is not.

However, in socialized systems the government does not determine an individual's health care but merely the rules about how health care resources overall are allocated. In practice it is still doctors that make decisions about the care of individual patients. Doctors and health professionals often play a key role in determining how best to allocate funding within the health sector. The overall allocation of national budget to health is determined by government based on a wide range of political factors and political direction of health policies is part of the democratic process. Most countries with socialized health systems also offer a private sector alternative to the publicly funded system so people can opt to pay for a service privately if, for example, a particular treatment is not available from the public purse.

Critics would contend that the nature of socialized medicine forces doctors to act as administrators.

• Subsidies are incentives for unhealthy behavior

Critics argue that subsidizing health care costs creates incentives for individuals to engage in unhealthy behaviors, because individuals do not have to bear the costs of their own actions and that individuals who do take care of themselves are, in effect, paying for the carelessness of others.

• Single-payer health care
• Two-tier health care
• Social health insurance

• Health care politics
• Publicly-funded health care
• Welfare state

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54. ^ Health system attainment and performance in all Member States, ranked by eight measures, estimates for 1997
55. ^ Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care. Report by the Commonwealth Fund (2007-05015). Retrieved on 2007-05-22.

• The Dangers of Undermining Patient Choice: Lessons from Europe and Canada - A report from a pro free market perspective comparing consumer choice in different countries which aims to dissuade Americans from adopting a social model of health care.